Biden's digital asset EO sparks public commentary

Legal analysts and payments industry leaders are discussing President Biden's March 9, 2022, executive order (EO), Ensuring Responsible Development of Digital Assets, encouraging government agencies to evaluate and comment on a range of digital currency initiatives and deployments.

Citing advances in digital and distributed ledger technology, Biden directed policymakers to collaboratively craft a legal framework designed to protect all stakeholders in the digital currency value chain.

Digital currencies, in rapid growth mode, can have "profound implications for the protection of consumers, investors, and businesses," according to the EO document, "including data privacy and security; financial stability and systemic risk; crime; national security; the ability to exercise human rights; financial inclusion and equity; and energy demand and climate change."

Jodie Kelley, CEO at the Electronic Transactions Association, commended President Biden for releasing the EO, stating its principles are consistent with the ETA's recently published guidance. "ETA members lead the payments and crypto space, and we look forward to continuing to work with policymakers as guidelines begin to take shape," she said.

Responsible innovation

Kelley further noted that ETA representatives and members have met with policymakers to explore ideas for a regulatory framework that fosters responsible, risk-based development of cryptoassets and a U.S. CBDC. These ideas are highlighted in the ETA's published guidance, available for download at www.electran.org/wp-content/uploads/2021-ETA-7-Guiding-Principles-of-CBDC.pdf and www.electran.org/wp-content/uploads/2021-ETA-5-Guiding-Principles-of-CRYPTO.pdf .

Melissa Baal Guidorizzi, counsel at international law firm O'Melveny & Myers, noted that the crypto world has traditionally been averse to regulatory mandates. "In the past, crypto companies have tried to avoid regulation all together," she said. "Now, with this executive order, those days are gone. This executive order is a direction from the Biden administration to ensure that all business and consumer use cases are covered by the appropriate regulator."

Mainstream adoption

Guidorizzi stated that regulators can no longer ignore growing demand for cryptocurrencies, and Biden's EO confirms that crypto and digital assets are going mainstream, which makes consumer protection a critical priority. "Regulators are ready to step in to ensure that the products and services currently offered comply with existing law and do not engage in unfair, deceptive, or abusive acts or practices," she said.

Laurel Loomis Rimon, partner, litigation department at Paul Hastings, agreed that consumer protection is paramount to responsible cryptocurrency adoption and implementation. "It's noteworthy that consumer protection is listed first among the priorities addressed by the President's Executive Order, while noting that around 16 percent of American adults have used cryptocurrencies," she said. "This is a shift from the typical singular focus on national, data, and financial security, and a recognition that cryptocurrency has moved into the mainstream and is here to stay."

Rimon went on to say that focusing on consumer protection underscores the need for the Consumer Financial Protection Bureau (CFPB) and other regulatory agencies to adopt a "whole of government" approach. "While the CFPB has been mostly on the sidelines thus far, there are avenues for the agency, along with the FTC, state Attorneys General, and federal financial regulators to address the consumer protection aspects of cryptocurrency," she said.

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